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UCC Statute of Frauds: Merchants & Signature

The statute of frauds requires that certain types of contracts be in a writing signed by the party sought to be charged. The general rules regarding the statute of frauds differ when the contract involves merchants and pertains to the sale of goods.

When only one party is a merchant, and the contract for the sale of goods is above $500, there must be some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought. Section 400.2-201(1), RSMo. Courts interpreting this section have found three definite and invariable requirements as to the writing: first, the memorandum must evidence a contract for the sale of goods; second, it must be signed — which includes any authentication that identifies the party to be charged; and third: the memorandum must specify a quantity. Howard Const. Co. v. Jeff-Cole Quarries, Inc., 669 S.W.2d 221, 226 (Mo. Ct. App. 1983).

If both parties are merchants, and if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents but does not object, a Court will typically find that a contract exists. Section 400.2-201(2), RSMo.

If the foregoing requirements under 400.2-201(1)-(2) are not met, a contract can still be enforceable if (a) the goods are specially manufactured for the buyer and not suitable for sale to others in the ordinary course of the seller’s business, (b) if there has been an admission that the contract exists, or (c) with respect to goods for which payment has been made and accepted or which have been received and accepted. 

Section 400.201(2) — sales of goods between merchants — merits further discussion. No signature is expressly required because both parties are merchants. Howard Const. Co., Inc. 669 S.W.2d at 226. However, in interpreting a confirmatory writing to be “sufficient against the sender,” some Courts have found that this \ means that it must be “signed” and/or state the quantity terms. Accordingly, for this section, some maintain it need not be signed by the party to be charged, but, rather, the sender.  On the other hand, others have maintained that all that is required is that a writing afford a basis for believing that the offered oral evidence rests on a real transaction and that “sufficient to indicate” is roughly equivalent to “more probably than not.” Id.

Contact us with questions relating to breach of contract, the statute of frauds, and contracts generally.